Ian Cowie was named Consumer Affairs Journalist of the Year in the
London Press Club Awards 2012. He has been head of personal finance at
Telegraph Media Group since 2008, having been personal finance editor
since 1989. He joined the paper in 1986. He is @iancowie on Twitter.

HSBC launches lowest-ever five-year fixed rate mortgage

The lowest five-year fixed rate mortgage ever seen in Britain is being launched today by HSBC, one of the biggest banks in the world.
Borrowers with a 40pc deposit or that much equity in their home will be able to lock into a rate of 2.99pc fixed for five years.

David Hollingworth, a director of mortgage brokers London & Country said: “This is the lowest-ever five-year fixed rate mortgage and is well ahead of the rest of the pack.

“Nottingham is the current lowest rate at 3.69pc with a £1,499 fee but to 75pc loan to value (LTV). At this rate there is little or no margin over most trackers on the market and it will certainly appeal to those borrowers that have been mulling over whether it’s the right time to fix and know exactly where they stand for the medium term.”

Jonathan Harris of brokers Anderson Harris, agreed: “This is the cheapest five-year fix we’ve seen and is part of a general trend among lenders to reduce their fixed rates.

“Funding rates have fallen, so we expect those lenders who have not yet cut their fixed rates to do so in the next few weeks. It’s great news for borrowers looking for extended security but don’t fix for longer than you are absolutely sure about – otherwise you’ll be hit with hefty early repayment charges when you try to exit, particularly as porting a mortgage is so much more difficult these days.”

Another note of caution was sounded by Ray Boulger, a director of John Charcol: “Whether people can actually get this rate, that is an entirely different question.

“Clearly, some will but our experience is that HSBC are even more picky than other major lenders, and slow as well, when is comes to assessing mortgage applications.

“We have had several situations where perfectly credit-worthy clients have come to us after being rejected by HSBC and we have been able to obtain a perfectly satisfactory alternative mortgage for them, albeit often at a rate slightly higher than HSBC’s. However, a mortgage you can get on decent terms is much more helpful than a great mortgage rate from a bank that declines you.”

But Peter Dockar of HSBC said: “Every borrower has different needs from their mortgage. We recognise that many are looking for certainty with their mortgage payments over the longer term.

“This is the lowest ever five-year fixed rate to come to the market and with the security of our retail deposit funding we are committed to offering competitive rates to benefit our customers with what is for many, their largest monthly commitment.”

But Mark Harris, chief executive of mortgage broker SPF Private Clients, remains sceptical. He said: “This is a very good deal as long as you are one of the few borrowers who will tick the two dozen boxes HSBC insist you tick on the application form and you can wait eight weeks for the offer letter. Otherwise, you may have to pay a bit more interest with another lender but it might be easier to meet their criteria and service levels may be more reasonable.”